95% LVR lo - doc advice

Hi guys,

I find myself in the following situation:

First 3 IP's were all full docs.
Last 2 IP's were 95% LVR low docs with Pioneer (Mobius I think).
One of these last 2 loans is starting to give me a bit of pain.
It was valued at $340K exactly 2 years ago (after a reno) and I found I needed to get a 95% LVR low doc as the market price was dropping while I was renovating. It cost me close to $10K for MI as well.
Situation now is that Pioneer has raised the interest on the loan twice since the last RBA announcement and the interest rate is now 9.99%. My financial situation still could not justify a full doc loan. All my payment history on all loans is excellent.

If I move from Pioneer I would have break costs + the value of the IP has probably come off a little. Also I would be up for more MI if I used another lender. Rents have gone up a little but not enough to cover a 0.5% increase on a $323K loan.

Any ideas?

Thanks in advance,
Aimy

 

Aimy,

I don't know if there is much you can do.
Can you sell?

Many small lenders have started putting up their rates and this is bad news.
The big lenders will soon realise that their competitors have increased rates so they will follow, this will force many investors to dump some of their IP's.

I am suspecting that this will be the trigger for price drops in areas with high numbers of investors (coastal areas & QLD?)

I was also hit on 2 of my loans but only by 0.15%.
My current loans are all full doc so if the rates go up by another 0.5%
I will be better off paying the exit fees and to refinance.

Cheers
Bill

 

Aimy,

Do you have any equity in your other IP's? If you can release $68k through a LOC against these IP's, you should then be able to refinance the troublesome IP at 80% LVR (still lo-doc) with a different lender at much lower interest rates and avoid LMI. You may even be able to capitalise the break costs. A good broker should be able to find a suitable lender/product.

JustB

 

BV - selling is an option for me but not one I wish to take atm - although it may come to that.

I will do nothing rashly but I'm just considering my position and wondering about alternatives if any exist which there don't seem to be.

JustB:

In hindsight I probably accumulated too much a bit too quickly - lesson learnt. But worst case is a sale and it won't lose me much. It would be a pity to sell now if the market recovers a bit. My equity funds are a bit depleted.

Thanks again to you both.

Aimy

 

Aimy,
I have sent you a PM
Take care.
Bill

 

From MediLend Finance

Hi Aimy,

Not sure if you have sorted it all out but my advice would be to refinance to a full-doc ASAP. The Lo Doc 90%LVR facilities via mobius are only going to get more expensive.

If you need some further advice just let me know.

Take care
Pascali

 

Hi Pascali,
Refinance to a full doc hey? - not really an option - I passed the full doc stage about 3 IPs ago. BTW I have a e 95%LVR with mobius. They did say they'd look at an interest rate reduction for me on the loan at the 2 year stage, since (and as long as) all the payments are on-time (and they are & have been).

Aimy